The service which would integrate both traditional TV and cable channels and compete head-to-head with cable and satellite companies, the Wall Street Journal reported. Google declined to comment on the report that seemed to be powered by unnamed sources. Time Warner, Disney and Discovery Communications were discussed as possible partners in the test market.

The cable and satellite TV market is a lucrative one -- raking in $150 million a year, so it would make sense that Google might want to be a part of it.

Although Google claimed it had no national broadband ambitions, its revamped Google TV product shows that it has ambitions about television. Right now, however, aside from Kansas City, Google may offer the video-phone-Internet service to Palo Alto, Calif. So far no pricing or channel lineups have been publicized.

While Google can deny it's taking on cable companies, its past actions -- from creating original content for YouTube channels, to Google TV, to test marketing a high-speed Internet service with video -- seems to indicate it's heading in that direction.